The end of 99p digital downloads? Tracks set to become more expensive after change in VAT law

A rule change in the budget could mark the end of 99p digital downloads (Picture: PA)

Downloading music tracks for 99p could be a thing of the past after George Osborne announced a change in VAT laws.

The chancellor revealed in his budget last week international companies would be required to pay the usual 20% tax on downloads from next January.

Online music distributors such as Apple and Amazon were previously able to offer lower prices because they were allowed to pay reduced VAT on digital music bought by UK customers.

The document included in the budget said: ‘As announced at budget 2013, the government will legislate to change the rules for the taxation of intra-EU business to consumer supplies of telecommunications, broadcasting and e-services.

‘From 1 January 2015 these services will be taxed in the member state in which the consumer is located, ensuring these are taxed fairly and helping to protect revenue.’